Hong Kong raises benchmark rate for third time after Fed hike
THE Hong Kong Monetary Authority (HKMA) raised its benchmark interest rate for a third time this year, in line with US Federal Reserve’s tightening move.
The central bank’s base rate was increased by 75 basis points to 2 per cent, it said Thursday (Jun 16). Monetary policy in the financial hub moves in lockstep with the Fed given the Hong Kong dollar’s peg with the US currency.
The rate hikes threaten to disrupt Hong Kong’s recovery just as the economy gradually rebounds from the impact of strict Covid restrictions. The government recently downgraded its annual economic growth forecast to a range of 1-2 per cent, although banks like Goldman Sachs Group see expansion of just 0.3 per cent.
“Business investment may slow down and asset market performance, including the property market could be affected too,” Samuel Tse, an economist at DBS, said before the rate announcement. Still, DBS expects a broader economic recovery in the second-half of this year.
Local banks will decide later Thursday whether to change their best lending rates in line with the HKMA. So far, banks including HSBC and Standard Chartered have maintained their rates. BLOOMBERG
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